Asian markets cautious after US volatility

October 10, 2018: Asian stocks began Wednesday mixed after a volatile session for US equities and as yields on Treasury bonds retreated from a seven-year peak.

Japanese shares opened higher after four days of losses — with purchases making up for the higher yen's dampening impact — before dropping back into negative territory in mid-morning trade.

“After four days of falling… Japanese shares are in a good place for bargain-hunting buys, even though a higher yen is somewhat weighing on the market,” Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.

Hong Kong was up 0.79 percent in morning trading, and Shanghai was up at 0.41 percent, moving back into positive territory for a second day after Monday's rapid sell-off.

But global markets remained cautious on a number of fronts.

US and European markets meandered on Tuesday, with investors nervous after 10-year US Treasury bond yields surged above 3.0 percent and the IMF sounded a cautious note on the global economy.

On Wall Street, the Dow closed down 0.2 percent at 26,430.57 with US shares facing another day of pressure over higher interest rates.

“Markets continued their tenuous voyage through a pothole-encumbered landscape, dealing with the fragile US-China relations… and Brexit developments providing more ambiguity,” said Stephen Innes, head of Asia-Pacific trading at OANDA.

“It's no wonder investors have a high level of misgivings.”

The euro was slightly higher against the dollar and the yen as traders refocus on Brexit talks.

Eyes on China

Eyes were fixed on the Chinese yuan Wednesday amid a backdrop of deepening US-China tensions and a weak yuan, following steps this week from authorities to spur lending in the economy.

Last week the yuan hit a 19-month low, with growing fears the currency was sliding towards the psychological milestone of 7 per dollar — a level not seen since the global financial crisis.

Traders are waiting for the latest data around new lending and money-supply — due as soon as Wednesday — which will be closely watched as Beijing strives to support flagging growth.

Concerns were also growing over two of the region's major property markets, after Bloomberg reported protests by homebuyers in China over discounted sales.

Global brokerage firm CLSA said banks in Hong Kong were cutting valuations, threatening to fuel a downward spiral in house prices.

Trade was mixed in other Asian markets, with Seoul down 0.9 percent, Taiwan up 0.1 percent and Singapore down 0.2 percent. 

Key figures around 0230 GMT

                  Hong Kong – Hang Seng: UP 0.8 percent at 26,379.55

                  Shanghai – Composite: UP 0.4 percent at 2,732.03

                  Tokyo – Nikkei 225: DOWN 0.8 percent at 23,450.14

                  Euro/dollar: UP at $1.1510 from $1.1494 at 2100 GMT on Tuesday

                  Pound/dollar: UP at $1.3157 from $1.3144

                  Dollar/yen: UP at 113.06 from 112.95 yen

                  Oil – West Texas Intermediate: DOWN 25 cents at $74.71 per barrel

                  Oil – Brent Crude: DOWN 15 cents at $84.85 per barrel

                  New York – Dow Jones: DOWN 0.2 percent at 26,430.57 (close)

                  London – FTSE 100: UP 0.1 percent at 7,237.59 (close)


Posted on: 2018-10-10T09:34:00+05:00